Tuesday, October 07, 2008

How is it going to work, this proposed "renegotiating home mortgages based upon lowered home values?" Can anyone explain this in simplistic terms my brain can handle?

Here's how I understand it right now as it might be applied to me...

The bank takes a loss on my over-valued mortgage. My home value is lowered and I renegotiate my mortgage based on this lowered value. I the meantime, my county loses property tax revenue. My office can no longer afford to pay me because we no longer have that property tax revenue and I lose my job and can't paid my renegotiated mortgage. So the bank takes a loss on the first mortgage, a loss on the second mortgage when I declare bankruptcy, and the credit crisis gets BETTER because of this?-------------------------------And really...if nuclear power is so safe, I propose the politicians live in a house near a nuclear power plant or near the Yucca Mountain nuclear waste repository. I mean, it's SAFE, right? Yes, I'm particularly sensitive to this issue at this given moment. But I think we ALL should be sensitive to it. We are unnecessarily creating problems that will be passed on to future generations.-------------------------------Social Security is easy to fix? Why haven't you fixed it then?-------------------------------McCain called Obama, "that one." Real nice. -------------------------------

The property tax thing will be fine if they adjust the mill rate to keep it revenue neutral. We went through this part in TO when they transitioned to current value assessment. It worked with a few bumps.

And if people go bankrupt or just walk away from their homes, then they won't be able to pay any property tax. At all. So they have to find a way to keep people in their homes.

No, that's what they thought in TO, but you make it revenue neutral for the taxes, and so each taxpayer pays the exact same amount as before, just on a differently priced home. Therefore the county has the same amount of money coming in. (A couple of people might be higher or lower, but here they just did one big shift all at once, and it worked.)

However, no guarantees it will work that way there, cause god knows how it would be implemented.

I hate McCain, but this doesn't sound so bad to me as a plan, as long as they only rewrite mortgages for the people who have some sort of job and can make payments. The Ninja loan people and the speculators are out of luck in my opinion.